The Central Bank of Nigeria (CBN) carried out one of its most aggressive Open Market Operations (OMO) auctions in recent history, mopping up N3.692 trillion in a single trading session as monetary authorities intensified efforts to tighten liquidity and contain inflationary pressures.
According to OMO auction results released by the apex bank, investor demand for the CBN’s short-term securities far exceeded expectations during the May 21, 2026, auction.
The CBN had offered N600 billion across two instruments, a 33-day bill and a 138-day bill, but total subscriptions surged to N3.692 trillion, representing more than six times the amount initially offered.
The development marks a dramatic shift from the bank’s more cautious May 12 auction, where only N116 billion was allotted out of N872 billion in subscriptions.
Data from the auction showed strong appetite for the CBN’s high-yield instruments as investors moved aggressively to lock in attractive returns.
The 33-day bill attracted N1.525 trillion in subscriptions against a N300 billion offer, translating to a 5.1 times oversubscription. The CBN accepted all bids at a marginal rate of 21.57 per cent.
Demand was even stronger for the 138-day bill, which recorded N2.168 trillion in bids against the same N300 billion offer, a 7.2 times oversubscription. The apex bank also accepted all subscriptions at a marginal rate of 19.97 per cent.
Interestingly, the shorter-tenor instrument offered a higher yield than the longer-dated bill, underscoring strong demand for near-term liquidity management tools.
Analysts say the CBN’s decision to accept 100 per cent of subscriptions, rather than rationing allotments as it did earlier in the month, signals a deliberate strategy to aggressively drain excess liquidity from the banking system amid concerns over inflation and pressure on the naira.
Broader financial system data released by the CBN showed that the aggressive OMO exercise had an immediate impact on liquidity conditions.
The Standing Deposit Facility (SDF), which banks use to park excess cash with the CBN overnight, dropped sharply from N6.103 trillion on May 20 to N5.797 trillion on May 21.
By May 22, the SDF had plunged further to N2.703 trillion, a decline of more than 55 per cent within two days, reflecting the massive liquidity absorption from the banking system.
Opening balances within the banking sector also declined from N102.47 billion on May 20 to N78.96 billion on May 22, representing a contraction of about 23 per cent.
